Severn Trent lifts business services guidance, Aviva sells Friends Provident

London open

The FTSE 100 is expected to open 23 points higher on Wednesday, after closing down 0.19% at 7,390.22 on Tuesday.

Stocks to watch

FTSE 100 water company Severn Trent lifted its guidance for its business services division on Wednesday following the sale of its North American business. In a trading update for the period from 1 April to 19 July, Severn said it now expects growth in both revenue and profit before interest and tax on a like-for-like basis.

Aviva has agreed to sell Friends Provident International (FPIL) for £340m to RL360, a subsidiary of International Financial Group. The sale is expected to create a one-off loss on disposal of approximately £130m but as FPIL did not contribute any cash to Aviva in its last financial year the disposal is expected to be positive to Aviva's cash dividend paying capacity.

BHP Billiton achieved its full year production guidance for petroleum and iron ore, it confirmed in its operational review on Wednesday, with annual production records at Western Australia Iron Ore (WAIO), Spence and two Queensland Coal mines. The FTSE 100 firm reported lower copper production, which the board said reflected the impact of industrial action at Escondida and the power outage and unplanned maintenance at Olympic Dam. It also said lower metallurgical coal volumes arose as a result of damage to third party rail infrastructure caused by Cyclone Debbie in Australia.

Newspaper round-up

Divisions over the UK’s Brexit divorce bill were laid bare on Tuesday as British negotiators pushed back against a mooted €75bn (£66bn) Brexit charge-sheet. On the second day of detailed Brexit negotiations, the British team peppered the Brussels side with questions over how to pay for unwinding 44 years of the UK’s European Union membership, after the government admitted in parliament last week it has financial “obligations” from its EU membership. - Guardian

A sudden fall in the pound just before surprisingly weak inflation data has raised fresh concerns about leaks from the Office for National Statistics, only weeks after strict new rules on access were unveiled to address the threat. Sterling sank half a cent against the dollar in the minutes before the consumer prices index was released yesterday, suggesting that some traders might have got wind of the highly price sensitive information, and another half a cent after traders could see the figures. - The Times

BP is considering spinning off certain US pipeline assets in the US Gulf and Midwest in an initial public offering, the company said in a statement late on Tuesday. The potential IPO would structure the assets as a master-limited partnership, a frequently used corporate structure for pipeline companies. - Telegraph

Europe’s corporate giants are returning their spare cash to investors while loading up on cheap debt, taking dividend payouts to their highest level in ten years, according to a study. The largest 1,000 businesses across Europe have raised dividends by a fifth to €234 billion since the financial crisis in 2008, while doubling the amount of cash on hand to €881 billion. - The Times

Ecuador has become the first country to publicly admit it will not meet Opec’s production curbs, saying it needs to pump more oil to address its fiscal deficit. The South American country’s promised cut of 26,000 barrels of oil a day is a tiny drop in the 1.8m b/d that the cartel recently agreed to curb until early 2018, but the decision is still the first crack in the deal’s unity. - Guardian

US close

US stocks put in a mixed performance on Tuesday, with analysts reacting poorly to the latest quarterly numbers out of Wall Street heavyweights Goldman Sachs and Bank of America.

The Dow Jones Industrial Average finished down 0.25% at 21,574.73, while the S&P 500 eked out gains of 0.06% to 2,460.61, and the Nasdaq 100 closed 0.69% firmer at 5,880.10.

Another large drop in the US dollar came on the back of news about a fresh setback in Republican plans to repeal and replace Obamacare, alongside a weaker-than-expected reading on house building activity.

David Madden, market analyst at CMC Markets UK, noted US equity markets turned lower after Bank of America and Goldman Sachs reported their second-quarter numbers.

“The earnings updates combined with the failure of Donald Trump to get his healthcare reforms passed gave investors the perfect excuse to cash in their positions after a very positive run recently."